The once-popular Algarve region suffered more than many property markets in the global economic crash of 2008. The area, which stretches along Portugal’s southern coast, was once the favourite destination of holidaymakers and second-home buyers from across Europe ‒ especially the British, for whom the Algarve was frequently the first choice for retirement overseas and a regular relaxing break in the sun. In the worldwide real estate crisis, however, prices fell by between 20% and 40%, and despite some signs of recovery they are still very far from reaching their pre-2008 peak again.
‘I’ve been an overseas property agent for 20 years, and I’ve never invested in overseas property, and I’ve chosen Portugal this year, because I think the time is right,’ says Mike Braunholtz, director of the Prestige Property Group. ‘I don’t see the market going below where it is now, and it’s definitely beginning to go up again, so it’s a good time to buy.’
The capital of the Algarve is Faro, which has a population of roughly 50,000 and an international airport from which the whole region is reasonably accessible. The Algarve is known for its unspoilt, sandy beaches, golf resorts and nature sanctuaries, offering relaxed, peaceful activities for all dispositions. High-end shopping facilities are also available for the residents of the many purpose-built resorts and housing complexes.
The Algarve’s most expensive residential properties lie within the so-called ‘Golden Triangle’. The three points on this triangle are the Vilamoura resort on the coast, with its popular marina, and two luxury golf resorts; Quinta do Lago; and Vale do Lobo. Residents include some of Europe’s top entertainers and footballers, in addition to British politicians and other wealthy families.
Prices for the properties, which often boast a modern architectural style influenced by Portugal’s Vasco Vieira, start at around €1m (£720,000) and go up to €20m if you want a large villa with a sea view and private pool. Apartments start at around €170,000 and townhouses at €340,000. A location within the golden triangle can add 10-15% to the value of a home; rising to +40% in Quinta do Lago or Vale do Lobo. Prices become lower in the west of the Algarve, where two-bedroom apartments can be acquired for less than €115,000.
The government has recently made moves to attract more foreign investors, including introducing a Golden Visa program whereby buyers spending at least €500,000 on a property can apply for a five-year residence permit. This offer is attracting increasing numbers of non-EU investors, particularly from China, Russia and the Middle East. Irish, German, Dutch, Swedish and especially French buyers have also been snapping up holiday or second homes in the region.
There are no restrictions on foreign buyers, and total transaction costs generally amount to about 7.5%, including property transfer tax and legal fees. Portuguese banks offer very competitive mortgages to overseas and native buyers alike, and annual property taxes are roughly €1,500.